Canada's largest media and telecom company's $3.4-billion bid for the specialty TV and radio station owner sparked a furor over media concentration among critics Friday and buzz over the deal thrust Astral Media among the top trending items on Twitter in Canada.
"Over-the-top concentration levels set to get worse if Bell take over of Astral approved," tweeted Dwayne Winseck, a professor in Carleton University's School of Journalism and Communications.
The deal will require approval from the Canadian Radio-television and Telecommunications Commission and a face a review by the Competition Bureau.
Industry watchers say the company could be forced to sell some of its radio stations in markets where it would exert too much control.
Canada already has one of the highest levels of media concentration among developed countries, and this deal only cements concerns, Winseck said.
"Astral has at least been a sizable independent player in the broadcasting system and therefore a significant source of diversity and to see it just folded into another one of these behemoths is not really helpful," he said in an interview.
The deal is part of a strategy among telecom players to buy up content to drive more traffic, and therefore more revenue, to their wireless networks.
It would give Bell one-third of the Canadian television market and see it rise from the fifth largest player in radio to the largest. For that reason, regulators should prevent the deal from going ahead in its present form, Winseck said.
In the past, the CRTC has prevented companies from owning more than three stations in any one market.
That could open the door for some of its biggest competitors — Rogers Communications Inc. (TSX: RCI.B), Shaw Communications Inc. (TSX:SJR.B) and Quebecor to scoop up some of the stations and build up their own empires.
That's exactly what Rogers did in 2007, when it acquired five Citytv stations in Toronto, Winnipeg, Edmonton, Calgary and Vancouver that the CRTC forced then CTVglobemedia to sell the stations as part of its $1.7-billion purchase of CHUM Ltd.
SeaBoard Group analyst Iain Grant said the deal "really changes" the media landscape, adding there will be many questions at the CRTC about whether deal makes BCE (TSX:BCE) too big.
"Whether it's good or bad depends on what sort of stewardship that Bell tends to have, so far I think they've shown that they are a responsible media owner," he said.
BCE CEO George Cope dismissed those monopoly concerns, calling the concept irrelevant in today's market.
"Anything that moves the pendulum away from regulation is a good thing for the consumer," he said.
"It's a yesterday world — the concept that there's any monopoly in any business anymore. That's years ago."
The company noted the deal would help cut costs as Astral products represent Bell's largest single content expense.
Winseck said that means Bell can reduce its reliance on negotiating contracts with independent providers, which would give the company greater power to control terms and pricing.
Consumers could feel the effects of reduced competition in terms of higher prices and less diversity on the airwaves, he added.
Aside from those media conglomerates and Telus Communications (TSX:T) — Canada's third largest telecommunications company, which, unlike its rivals, is staying away from buying media properties — there are few players left in Canada's media and telecommunications scene.
Corus Entertainment, a company spun off from Shaw in 1999, saw its shares rise Friday as speculation swirled over consolidation in the industry. However, its ties with Shaw make it an unlikely target for rivals, said Accountability Research analyst Kevin Chu.
Still any smaller media companies, like Cogeco, a minor player in Eastern Canada and even smaller Maritime Broadcasting System, could now become takeover targets for bigger players.
But Rogers, which recently teamed up with Bell on a $1.07-billion deal for Maple Leaf Sports & Entertainment, is not likely in any rush to add more media assets, Chu said.
In Western Canada, Shaw is focused on cable and content provision, while its rival Telus concentrates on its wireless business, reducing its chances of entering any war for content.
"That's definitely a setback for them," Chu said.
"It hasn't been affecting them yet, but going forward it's obviously good to have both content and wireless."Suggest a correction